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Disparate Groups Urge NY to Cut Taxes

by Associated Press, Michael Gormley
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corporate tax protestor

Michael Fleshman, flickr

Groups are calling for broad tax cuts, rather than those for film industry, other industries.

   Business groups as well as progressive social service groups told New York officials they must put an end to decades of targeted, often politically fueled tax breaks and, instead, fairly cut taxes to turn around one of the country's worst business climates.

   Senate Republicans who share control of the chamber held a rare pre-session hearing, featuring business groups that called for deep tax cuts. Meanwhile, in a separate news conference, progressive groups sought what they called tax fairness by eliminating breaks for the rich to cover the cost of reducing income taxes and to cut some of the nation's highest property taxes crushing the middle class and working poor.

   The groups, usually at odds, approached common ground just as Gov. Andrew Cuomo is preparing his 2014-15 budget and the Legislature prepares for the next session, beginning in January, the start of an election year for Cuomo and lawmakers.

   "There's something there, but it takes some leaders that are willing to get into details, rather than into sound bites," Michael Kink of the progressive group Strong Economy for All said in an interview.

   Joseph Henchman of the national Tax Foundation said New York's tax system, whose tax burden consistently ranks worst or second worst in the nation, continues to be an albatross.

   By comparison, he said, Nebraska has spent the last five years systematically fixing its problems and Michigan eliminated the tax credit it had been using to attract movie productions. Although Michigan lost some film productions, the revenue lost to the credit was used more effectively to lower other, broader taxes, said Henchman.

   Meanwhile, Cuomo and the New York Legislature expanded the state's $400 million tax break for film and TV production while giving NBC a tax break to bring "The Tonight Show" to Manhattan. Cuomo said the tax break helped bring 404 projects to New York since 2011, generated $5.4 billion in revenue according to the applications, and hired 350,000 workers.

   The Tax Foundation ranked New York's business climate as the 50th worst among states this year.

   Senate Finance Committee Chairman John DeFrancisco said several states are cutting taxes, while New York continues to see layoffs and an exodus of young people.

   "It's time to change all this," DeFrancisco said.

   Cuomo has said cutting just 1 percentage point of the tax rate for everyone would cost $6 billion in revenue, a drop in funding that the $135 billion state budget, which is still struggling from the Recession, can't afford.

   E.J. McMahon of the Manhattan Institute think tank criticized Cuomo and the Legislature for extending what were to be temporary tax increases, while claiming they weren't increasing taxes because they weren't new levies. Specifically, a 2009 emergency surcharge on million dollar earners to contend with a fiscal crisis was extended by Cuomo and the Legislature in a special session in December 2011, and again in a closed-door deal this spring. Cuomo and Senate Republicans had vowed during the 2010 campaigns to oppose any extension and Cuomo, in his first days as governor, said he'd consider an extension of the tax to be a tax increase.

   "We have reduced taxes tremendously," Cuomo said Wednesday.

   He noted his extension of the so-called millionaire's tax uses part of the more than $2 billion in annual revenue to reduce middle-class taxes. The extension was slightly smaller than the original 2009 tax increase and took effect days before the higher rate expired so technically all taxpayers are paying less than they had been, he said, although still more than if the temporary tax had been allowed to expire.

   But more is needed.

   "I said when I was elected we have no future as the tax capital of the nation," Cuomo said.

   Cuomo said his Start-Up New York program will change the perception of New York to a "no-tax state" and jump start the upstate economy. It offers a company and its employees no taxes for 10 years if they locate in New York.

   A 2009 emergency surcharge on million dollar earners to contend with a fiscal crisis was extended by Cuomo and the Legislature in a special session in December 2011, and again in a closed-door deal this spring. Cuomo and Senate Republicans had vowed during the 2010 campaigns to oppose any extension as a "job killer."

   The Unshackle Upstate business group earlier this week said New York needs to take "a bold step" and cut income taxes by 25 percent for upstate residents making less than $50,000, as well as cut the sales tax by half in several upstate counties.

   Frank Mauro of the labor-backed Fiscal Policy Institute also criticized $350 rebate checks to be sent to most New Yorkers during next fall's elections. He said that, instead, property taxes should be limited by a homeowner's ability to pay.

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